Randy Floyd says 2004 was a good year for his struggling cotton farm, by which he means a hailstorm in October wiped out only part of his crop. For seven years before that, an unrelenting drought had dried up any hope of a profit.
In the desertlike West Texas climate where Floyd has farmed since 1973, the only consistent harvest in recent years has come in the form of federal disaster aid: special subsidies approved by Congress each year to help reimburse farmers for the loss of their crops due to extreme weather.
Floyd, 49, has received a payment in each of the last five years, collecting more than $250,000, according to U.S. Department of Agriculture records.
“Without the disaster payments, I would have been out of business and lost it all,” he said. “The disasters have kept farmers here hanging on.”
But that, in the eyes of some farm subsidy critics, is precisely the problem: Disaster subsidies are warping natural economics on some American farms.
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“You really have hundreds of counties out there and tens of thousands of farmers who can’t reliably grow a crop, but they can reliably get a disaster payment,” said Ken Cook, president of the Environmental Working Group, a non-profit watchdog group in Washington.
“We think it’s worth standing back and saying, `Shouldn’t we have another plan for these regions?'” he said.
Cook is part of an unlikely coalition of environmental groups and fiscal conservatives that is mounting a campaign to pressure Congress to revamp agricultural policies in the 2007 farm bill, if not sooner.
While critics have long attacked farm subsidies, Congress may be more receptive to their arguments this time because of a soaring federal budget deficit and increasing criticism from international trading partners about the effects of farm payments.
In 2003 alone, farmers received $16.4 billion in subsidies, mostly payments to individuals to support the prices they receive for their commodities.
“The war against subsidies is out there,” said Dean Kleckner, the former president of the American Farm Bureau. “American farmers and European farmers better get their head out of the sand and wake up and smell the coffee.”
Recent rulings by the World Trade Organization declaring U.S. cotton subsidies and European Union sugar subsidies illegal could pressure U.S. lawmakers to change farm policy, he said.
Facing a `really hot spot’
While Congress may decide to fight the WTO because cutting subsidies is so politically unpalatable, Kleckner predicted that ultimately the U.S. would lose the argument.
“Congress and the administration are going to be in a really hot spot,” said Kleckner, currently chairman of Truth About Trade and Technology, an advocacy group that promotes free trade and biotechnology.
Kleckner said American farmers might find it easier to swallow cuts to subsidies in order to balance the budget, rather than to promote free trade, which could be seen as giving in to foreign demands. Either way, he said, farmers are going to be unhappy.
John Block, who was secretary of agriculture under President Ronald Reagan, said he expects some subsidy cuts in the 2007 farm bill, and possibly a shifting of money from price-support programs to conservation programs. But he said the reductions may not be as severe as some predict because President Bush and the Republican majority in Congress were elected in part because of their strong support in rural America.
“They are going to be cautious in how far they go after farm supports,” Block said. “We may be surprised how the debate unfolds.”
Defenders of subsidies say they are a necessary safety net to ensure an affordable food supply and to help farmers deal with the vagaries of weather and global markets.
“It’s really a pretty doggone good deal for an American taxpayer,” said Sam Willett, senior director of public policy for the National Corn Growers Association, noting that Americans spend relatively little of their income on food compared to people in other nations. He also said such assistance was necessary because other nations subsidize their farmers even more.
“How do you compete when you have other countries at a much greater advantage?” Willett asked.
But critics argue that price supports encourage farmers to plant on marginal land, overproduce certain crops and consequently drive down prices in the United States and abroad. They also argue that subsidies tend to favor large-scale producers of “commodity” crops such as cotton, soybeans and corn, while much of the food that people eat remains unsubsidized.
`Corporate welfare’
“Farm subsidies are one of the most expensive forms of corporate welfare in the federal budget,” said Stephen Moore, president of the conservative Club for Growth. “Most Americans believe it goes to the small family farmer, but the truth is that the lion’s share goes to large agribusiness.”
Cook of the Environmental Working Group said American farm policy relies on the export market to buy overproduced domestic commodities. When that doesn’t work, U.S. taxpayers pick up the tab.
“If you lay off a factory worker in Chicago because you outsource the job, we give them $10,000 and a hug and a certificate for retraining,” said Cook, whose organization favors federal spending on conservation. “What we give these guys is $150,000 for cotton year after year that keeps them in the game internationally.”
The government’s disaster payments program illustrates the point, he said.
From 1995 through 2003, Congress granted $11.3 billion in disaster payments to compensate nearly 1.16 million recipients for a variety of floods, droughts, hurricanes and other calamities. That was on top of $104 billion in price-support payments for a handful of crops such as corn, cotton, wheat and rice.
But more than 15 percent of the disaster aid recipients, or 176,379 farms, collected disaster payments in at least four out of nine years, marking them as “chronically dependent” on disaster subsidies, according to USDA data analyzed by the Environmental Working Group.
Transition in policy
Cook said he wouldn’t recommend a “cold turkey” approach to cutting off disaster payments to farmers who have come to rely on them. Rather, he said, the government should develop a transition process that allows farmers in marginal areas to put the land into conservation programs or convert it to cattle ranching.
“It’s a natural place to invest in conservation programs that take this land out of production,” he said.
Farmers in Texas drew the most disaster aid over the last nine years, accounting for more than $2 billion of the $11.3 billion total. And Gaines County, home to cotton farmer Floyd and the state’s biggest producers of cotton and peanuts, led the state in disaster subsidies, owing largely to a lengthy drought that broke only in 2004.
“Disaster payments are the No. 2 crop in the state of Texas,” Cook said.
That’s not how Floyd and other farmers in West Texas see it. They resent any suggestion that they are abusing the disaster subsidy system.
“I take pride in growing things,” said Floyd, who has 1,200 acres of cotton and another 500 acres of pasture for his cattle herd. “There’s no pride in drawing a disaster check.”
Scratching out a living
Even with the disaster payouts, private crop insurance and federal crop subsidies, farmers in the area complain that they cannot make a profit on cotton when it is selling for about 40 cents a pound–the same price earned in the 1960s.
Nor do they see anything wrong with the government subsidizing their efforts to grow crops in a naturally dry region that, without thorough irrigation, would scarcely support intensive agriculture.
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“Why do people live in hurricane-prone areas like Florida?” said another Gaines County cotton farmer who also received disaster subsidies in each of the last five years but declined to be identified. “The government gives those people disaster payments, so why not us?”
The disaster payments keep more than farmers afloat, Floyd said as he drove past the boarded-up storefronts of what once was the thriving main street of Seagraves, about 60 miles southwest of Lubbock.
“The U.S. government is subsidizing farmers, but it’s not only us they are subsidizing,” he said.
“They are subsidizing every consumer that goes to the grocery store to buy food, the local tractor dealer, the doctor, the gas station,” Floyd explained. “Without the farmers, there would be a lot of people out of business.
“These little West Texas towns are all drying up and blowing away,” he said.
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Disaster subsidies going to driest farmland
An analysis by the non-profit watchdog agency Environmental Working Group shows that states whose farmers receive the most federal disaster payments–subsidies for crop failures due to catastrophic weather –are primarily in the Great Plains. Critics say many farmers in these states have become more dependent on subsidies than on their crops, which receive some of the lowest rainfall amounts in the U.S.
Annual average precipitation
In inches (area state map)
Top recipients of disaster aid
In millions (total from 1995-2003)
1. Texas $2,057
2. N. Dakota $795.9
3. S. Dakota $563
4. Oklahoma $534.2
5. Kansas $510.9
6. California $502.1
7. Nebraska $498
8. Georgia $468.3
9. Montana $417.9
10. Minnesota $355.4
Source: Environmental Working Group, U.S. Department of Agriculture
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